Liesman: "The Fed Gets To Print Dollars"; Bullard: "Indeed We Do"

Fed mouthpieces Bullard and Lacker are out in force this morning talking the market back from the edge of yesterday's FOMC Minutes and reassuring us that the economy is going to be weak enough for a lot longer to justify the Fed's actions. However, right at the end of Jim Bullard's interview with CNBC's Steve Liesman, we got a glimpse of the reality behind the curtain as the St. Louis Fed president threw Bernanke under the purge-ry perjury bus... Following a discussion of fiscal policy uncertainty and the need to carefully spend what money we have, Liesman jokingly commented to Bullard that it is "Easy for you to say, you have a lot of dollars to spend; you get to print them!" To which the now foot-in-mouth Bullard replied, "Aaahh; indeed we do."This seems a little different from what Bernanke previously told Congress.

Forward to around the 7:45 mark (though the early discussion is worthwhile as Bullard talks the economy down)...

They will simply play the insanity defense card and possibly get away with it...

What gets me is how they bicker and posture and discuss their "options".

There are no options. They're broke and need to go in to BK. Any system that relies on creating its own ficticious wealth to sustain itself is at the end. When you're creating almost half of what your running budget needs, then you're broke. When you're pretending that the other half you need to operate and which is created from thin air is supposed to have the same nominal value, then you're simply a shyster. Good luck trying to bamboozle the world going forward.

See! Its all perception of the dollar not what its real shitty value is. Wait till the Fed unloads all its Treasuries. End Game because no one will want it. Unless they just transfer it to a GSE. Then you know the world is fucked.

While the Obama administration sets out to eviscerate the gun rights of American citizens in the aftermath of Sandy Hook, earlier this week it was announced that the Department of Homeland Security has awarded a company a contract worth over $45,000 dollars to provide the DHS with 200,000 more rounds of bullets.

In the 20th century, the greatest unnatural killer of human beings was not plague, cancer, or accidents. It was democide: death by government.

Governments murdered more people in the last 100-plus years than any other killer in existence on record. Statistics vary between 250 and 300 million dead depending on the source, but these counts typically only include civilian casualties and are underestimated. With military deaths added, the numbers soar much, much higher.

They don't need the military. All they need is a court ruling stating that senior debt status transfers to a derivative when it is created. Why else would the large banks hold onto the vast majority of derivatives and resist a public trading market for them if the instruments have as little intrinsic value as most of us assume?

Just a tool to get around capitalization rules? Maybe, but I'm not betting my house on it.

The average person who believes they will be paying back their debt with inflated dollars once the Fed is successful at igniting inflation, may wish they had owned their stuff before the reset.

And this is why the Federal Reserve Corporation and their employees are less trustworthy to manage US monetary policy than the American peoples elected congress critters. Going back to a Gold standard will further cut down on the miss-management of our nations money supply.

The Federal Reserve corporation serves many purposes. One, to backstop banks who are over leveraged. Two, it allows unlimited deficit spending to be undertaken by a government to keep the debt moving upwards.

A gold standard will fail every time if we allow fractional reserve lending. Even if the government "pegs" a dollar to gold it merely means that it will have to devalue it some time in the future.

If we were to think in terms of weight of metal, then we could start to get somewhere.

Like a TV that costs 8 grams of gold. So you pull out 8 1 gram gold coins, etc.

If I had a printerI'd print in the morningI'd print in the eveningAll over this landI'd print out DollarsI'd print out EurosI'd print out bonds for all my fat catsAll over this land

If I had a chopperI'd drop cash in the morningI'd drop cash in the eveningAll over this landI'd drop out DollarsI'd ring out EurosI'd ring out bonds for all my fat catsAll over this land

If I had an algoI'd front run it in the morningI'd front run in the eveningAll over this landI'd front run DollarsI'd front run EurosI'd front run all the bonds for my fat catsAll over this land

Well I've got a printerAnd I've got a chopperAnd I've got an algoAll over this landIt's the printer of BernankeIt's the chopper of TimmahIt's the algo of William Dudley and all his fat catsAll over this land

only problem is the bankers have accumulated most of the gold for cash. you cant have a gold monetary system when its all concentrated by banker fucks. the masses have been fooled and fleeced. Its unfortunate gold concentrates in the hands of the powerful and does not circulate freely among the masses like we would all like in a gold standard.

Everyone who would like to tell Congress to lay off the gun ban routine, please follow this link to the "take action" center and there is an already filled out email if you fill in your area code and personal info. Please inundate these assholes trying to circumvent the constitution!

Yes it's true, every ass gets wiped when you have endless printed toilet paper... But, you won't be able to buy the food to put in your mouth to create the shit that your ass will need to wipe itself because you'll not be able to afford it.

San Diego: Just minutes after an interview with Steve Liesman, St Louis Fed President Bullard was rushed to La Jolla Hospital for the Filthy Rich suffering from a bowel obstruction. After a two hour surgery, Bullard is in the recovery room and as comfortable can be expect after removal of the anal obstruction: Steve Liesman's nose.

Chief Surgeon Dr. Noh Fee Noh See said he tried many conventional and unconventional surgical procedures but could not dislodge Liesman's nose from Bullard's behind. At the last minute Bullard was saved by a Tweet from Treasury Secretary Geithner to Leisman, promising Liesman an exclusive interview with Geithner…something about a bank holiday. Immediately, Leisman's nose popped out of Bullard behind like a champagne cork.

The size of the U.S. debt is large enough to support an increase in interest rates. Even when the economy is reactivated, it will take time before it can successfully withstand an increase in interest rate. They can say many things on TV, but in reality, we will see rates low for much longer.

US authorities defended their decision not to prosecute HSBC for accepting the tainted money of rogue states and drug lords on Tuesday, insisting that a $1.9bn fine for a litany of offences was preferable to the "collateral consequences" of taking the bank to court.

Laundering money for drug cartels is now legal. Just expect that you will have to give the U.S. a cut of the proceeds. Our government is no different than the mafia and I really do not see much of a difference between the United States government and the drug cartels.

“If our nation can issue a dollar bond, it can issue a dollar bill. The element that makes the bond good, makes the bill good, also. The difference between the bond and the bill is that the bond lets money brokers collect twice the amount of the bond and an additional 20%, whereas the currency pays nobody but those who contribute directly in some useful way.?It is absurd to say that our country can issue $30 million in bonds and not $30 million in currency. Both are promises to pay, but one promise fattens the usurers and the other helps the people.”"

It was a very annoying and creepy 3 months. He is even more annoying than Steve is on camera, and is also nonstop... and when patients are not around is cruel to staff and wife. Came to find out he was also being investigated for Medicaid fraud and was self-medicating with IM Demerol. Yikes.

He finally mentioned his brother was Steve Liesman and it all fit. I told him, "No thanks"!

9 out of 10 plebes could care less about Fed printing, as they have yet to consider the correlation between wages and purchasing power when Benny shakes that toner. Now, add Kim Kardashian's ass into the story and it might turn some heads.

There is a rumour that she is wearing padded underwear for all the dress pics. So, while the swim suit shots show a fairly large ass, the extra large ass portrayed in most of the photos are due to padding. Also, they have silcon ass implants now I hear. Alternatively, that research into using stem cells to promote fat cell production to permanently enlarge breasts could quite plausibly be applied to produce large asses.

I think treasury ought to stamp out 16 platinum coins 'worth' 1 Trillion each, dated 2013, and just hand them to Bernanke for the reset. Call it good. Then go back to printing our own United States Notes again. AMF to the Fed -- Adios Motherfuckers.

Why not stamp out 32 of them and we can go on this whole Merry-Go-Round spending spree again?? I've said it before here, if voodoo economics such as this really work, why the hell are ANY of us paying taxes? Just print it or mint it!!

Assuming Bullard was not actually making a mistake, it suggests to me that The Fed are on the threshhold of making good on a promise Bernanke made in years past, which was that if things got bad enough they could just drop money out of helicopters to boost the economy. In the real world that could be some similar gambit having the desired effect.

If that day is coming then they will start to telegraph the event well ahead of time using exactly this sort of "oh wait did I really say that ha ha silly me" kind of mind-fuck head-fakery.

I'm no expert at any of this of course. I just read between the lines.

The Fed can't stop. It is a built in part of our system. They have been doing it since at least the Korean War because...it is a built in part of the system. The higher the debt is, the higher level they have to do it at. All this crisis did was kick us into debt future about 50 years. Eventually 16 trillion a year will be the deficit, not the debt. The system doesn't work if the Fed ever stops. The entire debate on the issue based on complete ignorance. There is no debate. This just how our shitbag system is designed.

Good question. I'll be interested to see how others on here answer that. For me I believe it would cause long term interest rates to rise at least 1/2 point on long Ts almost immediately, and then continue higher until the economy falls into recession (within a few short months), which would then cause rates to begin to fall again, but not as low as now unless the Fed stepped back in.

And there would be a serious bear market in stocks (and Ts, of course). Gold and other commodities would fall also, bringing gas prices down, imo. Deflation would be likely during the recession.

To stop "printing" would mean to stop buying bonds, but not necessarily reduce their balance sheet. That would require actual selling of the bonds they currently "own". That would be an even greater disaster, increasing interest rates more and, as a result, creating an even deeper recession / depression -- depending on how quickly they sold their bonds.

Also, the significantly higher T rates would force the federal government to reduce spending as borrowing more and servicing the current debt would quickly become quite painful and maybe even unsustainable.

The reduced government spending would then exacerbate the recession probably pushing us into a depression, if we weren't already in one.

Bottom line: The Fed can't stop abruptly. They will need to cut back slowly as (or if) the economy strengthens enough to allow them to do so.

its never gonna happen. the FED will never "unwind" because it can't unwind. Telling somebody that they are going to get fucked slowly, doesn't take one's attention away from the fact that that somebody is still going to get fucked. So, in the end, the FED cannot unwind without tanking the Bond market. And they are not about to do that given the carry that has gone on on the long end, most of it propping up a superinflated stock market.

So, whats that phrase that somebody always writes on ZH at least 100 times a day? thats right! "Gold bitchezzzzzz".

Yes, but TPTB have decided that level of pain is unacceptable; it could lead to significant civil unrest, violence, and perhaps a lurch to a political extreme, like Germany's election of Hitler in 1933.

Keep in mind that my view is obviously in the minority on ZH. Most here are Libertarians and/or Austrians, and therefore, oppose nearly everything the government and the Fed do including stimulus spending and a monetary policy that employs fiat currency.

But, imo, we are not necessarily "screwed", a term which I assume most here use to mean that a collapse of our entire financial and/or economic system is inevitable. In my view there is a small risk of that (maybe a 5% chance), but the most likely scenario is that we "muddle through" with slow growth for another 5 years or so, have moderate inflation (perhaps as high as 10% annually) for a few years, see spending reductions that reduce the deficit (in real terms) in FY14 and beyond, thus allowing the debt to stabilize and eventually become more manageable as the moderate inflation reduces the value of that debt and provides more (inflated) revenue to the government with which to service the debt.

The marginal buyer for US Treasuries would disappear, leading to an abrupt shock to interest rates. How interest rates actually react would be governed by the fallout of a couple dozen trillion in notional credit derivative positions exploding across the financial landscape. In other words, stopping printing really isn't a viable option for them.

USE Fiat Currency, printed at whim to purchase every single hard asset that is perceived to be "under water", so that when the Tide goes out, they own everything at depressed value Fiat dollars. If only I could get a few trillion dollar credit line too .... I could just buy up everything on the horizon, eventually, I would own EVERYTHING. Real-estate would be my main target.

The government borrows from the FED. That's credit, not money printing. The government doesn't have money, it has debt.

The FED does print money. Your wallet holds federal reserve notes. Redeemable for absolutely nothing except what the next guy is willing to accept it for.

The more inexplicable thing though is that the FED loans the government all sorts of imaginary digital money, credit. Turbotaxcheat timmy goes to the FED, borrows some 0's and 1's and distributes it to everyone on the government dole. It's not real money. it's nothing. it comes from nowhere. The FED gives the government imaginary money backed by absolutely nothing. That's not printing, it's magic. They made money out of nothing. They are God. Benny breathes on the computer and boom the imaginary money has life. He speaks and it becomes real like the stars and the earth and the animals in the sea. Pretty soon he'll take a rib from me and create a suitable mate... like a government EBT card.

Ah yes, the "end of empires" chart. It's good to chill the marrow once in a while.

The Romans in 470AD didn't know they were entering something that would later be called The Dark Ages, and I wonder what they would have had to say about the matter if they had known? And since we've already had The MIddle Ages I guess our period of recovery will be called The Late Middle Ages? Or maybe we'll demand special treatment (as usual) and we'll rename the period of Western history from 800AD to now as the Late Dark Ages so that we can proclaim The Middle Ages to have started around 2020? Oh and see here what happens next, that means we get to have another lovely Renaissance in about 400 years down the road.

However I really want to suggest to any future historians reading ZH 400 years from now to just stop there. We don't need everything you think comes after, like the Enlightenment or Industrialization or Post-Modern or Internet Age. And when you get to that whole Facebook Age thing, really just run the other way.

Been there. Wasn't worth it.

Do enjoy the mead and wassail though. Can't have a real Middle Ages without those.

It would seem natural, that money is created by the State, and in fact most Central Banks seem to be owned by the State and run by it. I say "seem" because, to all intents and purposes, it is an apparency. They are almost constituting a "fourth power" in addition to the three legally constituted and well known "traditional" powers, legislative, executive and judicial.

When the State needs money, it does not order the Central Bank to credit some money to the treasury’s account. The State has only two ways to obtain money. One is taxation of it's citizens, the other is borrowing from the banks.

When the Central Bank issues money, this is done in the form of a loan. The State has to borrow this money, and must promise to repay it, with interest.

The same is true of course for a private person who needs money borrowing from a commercial bank. The bank is happy to loan, as long as you can show you have security, and promise to repay with interest.

How can the banks "create" money? That is a good question. Is it not the State's printing office that prints all the banknotes?

Banknotes, when they are printed, are considered the property of the Central Bank. They are not given to the State to spend, but are brought into circulation against a corresponding debt. Anyone wanting some of those notes to spend, has to "buy" them by giving up some of their credit. And in any case, most of the money in circulation (more than 90%) is not banknotes but "credit".

When you go to your bank asking for money, the loan you get is created right there in your bank. The "money" consists of figures on your bank account, and it can be spent writing checks, giving an order to transfer or drawing the cash. Banks only have to have a small percentage of their loaned-out money actually available. The rest can be paid out just by moving some figures from one account to another. The important thing to know: Money is created just by inserting some numbers into a computer.

In practice, it works like this: For every 10.000 a bank gives out as loans, 1000 or 2000 have to be deposited at the central bank. That means, if a bank collects 100.000 in deposits, it could keep 10.000 for liquid cash, put 90.000 into deposit with the central bank, and it is then allowed to create 900.000 of fresh money just by writing the figures on someone’s accounts!

In the case of the government needing money to spend, the procedure is slightly different, but the result is the same. The government has to issue papers that promise interest and repayment. Those papers are "bought" by the banks, who "sell" them to their wealthy clients, or who may also keep them, and the government gets credited an equivalent sum of money.

The irony here is that the government, who should by rights be the issuing authority of the money that circulates in the country, has to borrow the money from privates (through the bank) and that is has to pay interest for this.

Now we start to see why the government never has money, and why much of our taxes go "off the top" of the budget, towards debt service.

Let’s review. In their shortsighted greed and hubris, in their pursuit of extraordinary personal wealth, a small group of exceptionally wealthy and politically well-connected bankers took enormous and obvious risks that nearly destroyed the global financial system. In response, two separate bailouts took place. One was the congressional sideshow that gathered all the media attention, and the other was the real deal, with over $12,000 per household in money created and another $150,000 per household committed to be created if necessary.

The $12,000 per household was paid in cash, freely spendable cash. Cash that could take a big chunk out of the value of the US dollar if it got out into general circulation, both directly and via the “multiplier effect”. So the Fed began paying off the bankers not to spend the massive amount of cash that had been created and given to them under highly favorable terms.

One could liken this situation to that of a loaded revolver (a six-shooter to continue the corral theme). In essence, the Federal Reserve dealt with those mischievous risk-takers at the banks who had nearly destroyed the financial world by handing to them a loaded revolver that was pressed against the heads of all the nation's savers, investors and retirees. A revolver that could destroy most of the value of your personal savings. Then the Fed said "Please don't pull the trigger! We will create however much money is needed and pay it into your personal bonus pools, just so you won't pull the trigger on that revolver we just handed to you."

This is essential to understand, because what does paying higher rates than the banks could otherwise get on excess balances and reverse repos really mean? It means higher profits and bonuses. Ultimately, the Fed’s official inflation containment strategy is to always be able to offer banks a better deal than any private investment alternative. A better deal means the bank taking in more income, which means the banking executives involved get bigger bonuses. The source of funding for this ability to always pay more than the private markets is the ability to directly create a limitless amount of money. At this point it is a very low interest rate, but the rate can go as high as needed, when inflationary pressures build.

This may sound outrageous, but all it really does is demonstrate the true nature of the Federal Reserve. It is owned by the banks. It is run by the banks. As we are seeing demonstrated right now, its job in times of crisis is to manage the money supply for the benefit of the banks, regardless of the harm inflicted on the rest of the nation.

I dont have highspeed anymore, so I can not watch the video But Bullard is either an anti-Keynsian, reformed-Keynsian, or a tomato can. In any case, he has to conform if they are going let him become a voting member. Just because you tell the truth does not mean you think it is correct.

Now, I'm all for people being able to make money off their money by getting reasonable return or interest... but when banks can lend it into existence without any work at all - it's axiomatic that it is a thefot of productive value.

The issuing power should be restored to The People, to whom it properly belongs. The US government should "nationalize" the Fed, and lend money to banks at interest, thus inverting the scheme.

But look what they did to Ron Paul. We're riding this thing to the bottom.

We get the impression that more and more segments of the US elite are now seeing openly, as opposed to feeling it secretively, that the immense divide between the proponents of the "status quo" oligarchy and the encroaching apprehension of reality is not tilting in favour of that hopium ball park of our scions of USA, USA.

WHere do we go from here?

In fact it is the hard reality of the WS financial world which will show the way to the acceptance of this new reality, which ever it is :

1° FED saying QE from now on is kaput.

2° Congress saying we are in the shits to meet the entitlements cum defense spending conundrum. Remember we have two months to get to this tipping point.

3° Margin squeeze of WS scions start screwing up the P/E of all these levitated assets big time.

4° Some external event brings crisis and financial stress further to breaking point.

I wonder if Obama is borrowing someone's balls... we can support Israel, but the thing is, those who would American blood and treasure to defend Israel no matter what, and fight another needless, barbarous war on the rumor of what Iran might possibly try to one day do [but which we and Israel have done] is not only bad thinking - it's treasonous.

Bil Kristol and his 'Emergency Committee' are warmly invited to suck a bag of dicks and fuck off to Israel.

I did today as mine expired in December. This is all about two fucked up "states": The UNtied States and Russia. I was hoping for a Simon Black "travel the world on daddy's money guest post" but I hope you will all tolerate my indignations. I will be brief. I am trying to establish double citizenship for my children; US and Russia. Do not confuse double citizenship with dual citizenship as they are not the same.

The nearest Russian consulate to me is in Seattle, we are in MN and you can't do this shit by mail. Apparently the Russkie consulate travels from city to city from time to time to do some consulate "work" but they only gve 14 days advance notice. They will be in Minneapolis on Jan 18 and for some fucked up reason I need a valid U.S. passport in order to sign off on my kids becoming Russian citizens.(only when they are in Russia though, check the laws)

So how do you get a US passport in just a few days? I called the Department of STATISTS and explained the situation in detail. After I was finished, the guy asked "So what country are you traveling to then and when?" I am not going anywhere right now I explained again. Turns out there is a way to get the new passport but now I have to appear, in person, before the almighty state as to why I need a passport expidited even though I am not going to be travelling abroad in the next two weeks. The concept of double citizenship is not encouraged by the STATIST DEPT and one reason is tax laws. So now I have an appointment with the U.S. on Monday at High Noon that took me 45 minutes to get set up via their re-re-re-redundant automated telephone system. This just ought to be the thrill of my life.

It gets even better though: It turns out that I also have to meet with the Russians in person. What the fuck is this? Reykjavík? I had to inquire as to where this meeting would take place. Anyone want to take a guess? US Bank in Minneapolis.

I think many of you can understand why my blood is boiling and how I have suddenly developed a nervous twitch in my neck.

I think I will wear my threadworn Ron Paul 2008 shirt to that meeting. I am measuring my words carefully now for those encounters with the two states. All this for me not to go anywhere. And the cost of it all besides my nerves? Get out your checkbook.

Thank you for listening if you did and I apologize for how fucked up we have let this world become as a result of central banking.

I can not and will not tolerate corruption of blood. This whole financial mess we have been trying to deal with for the last decade is not my children's fault. I just want the option to get them out of the way if need be and the need seems to exist.